As long as the proceeds of the sale (cash) remained in your TFSA account it does not affect your contribution room.

No for example if you bought 1000 shares of a certain stock and it goes 20x you can sell and take profit with no effect on your contribution room.

EDIT: Removing the funds from your TFSA is what will affect your contribution room.

I don't have much dog in this fight as I'm in a similiar boat, but from what I understand, as long as you don't withdraw the negative from the account, you're ok. 

Correct if I'm wrong but, example:

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buy stock at $100. it drops and you panic sell at $80. Lost $20. But you took $80 and bought something else right away. Nothing happens at the end of the day.

But if you sold at $80 and then withdrew that money into your bank account, then you'd be dinged $20 on the contribution room. 

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Again, correct me if I'm wrong cause that's how it's been explained to me.

What is already in the account doesn't effect the contribution. As long as you never pull the money out of the actual account, nothing changes.

It doesn't matter. It's the amount you transfered into your TFSA that matters. 

Let's say I max out my yearly contribution, then buy options and lose everything, I still have to wait the next year to contribute more

Where my confusion lies, is that the second ETF was bought with the same contribution from the first ETF.

That isn't even true. The contribution amount is just what you are allowed to put in.

If you put in $1000 that is used contribution room. If it goes up to $100k or to $0, that is irrelevant because you were only allowed to put $1000 into the account.

The value of the account is irrelevant. Only what you put in or take out matters.

Only If you sell and withdraw at a loss it will lower your contribution amount.

https://youtu.be/zsnPPlT7IQ4 go to 11:45 for your question.

Will selling an ETF and buying a new one via funds that are in my TFSA affect my contribution amount?